An upward and over extended market, set against the backdrop of a downtrend may swing the EUR/GBP buyer-seller pendulum back towards the bears again.
EUR/GBP was in sell mode until a recent move changed the shape of the price structure. The 4hr RSI was on average printing below 50% over the last three weeks and recently broke above the 60% mark. This can be considered overbought territory in the context of a full-fledged bear market. Therefore, the present corrective rally is vulnerable for a turnaround from here.
Further, the 50SMA is still below the 200SMA on 4hr charts. However, should the pair extend its recovery from multi-week lows into a new trend, traders may require a contingency plan in place.
(Market News Provided by FXstreet)